Health cover

Readers' Views No 235, December 2002
OECD Observer

Your healthcare special raises some interesting points about the role of insurance and the differences across OECD countries (Observer No. 229, November 2001, also available online). But maybe your expectations of private insurance provision are a little optimistic.

As a businessman that has just returned to live in the US after living in France and Hungary for most of the 1990s, I was calmly expecting a well developed private insurance system that may be costly compared with some countries, but at least it would be efficient. What I have found here is a quilt of 50 chaotic patches, since most health insurance is overseen at the state level.

A recent opinion piece in The Wall Street Journal sums up the muddle: “But over the past four decades state legislatures have passed more than 1,500 [mandates], requiring that insurers cover everything from infertility treatments to wigs for cancer patients. Together with procedural mandates such as ‘community rating’ (insurers can’t price based on differing risk factors such as age) and ‘guaranteed issue’ (you can wait until you’re sick to buy insurance), [these mandates] are largely responsible for the vast disparities in the cost of health insurance among states.” The same article says that a self-employed 30-year-old man in New York State would have to spend more than $250 a month to insure himself, but just $36 if he moved a few miles away to Connecticut.

The effects are myriad. Insurers dodge among the state regulations to provide expensive and possibly flawed coverage that fails when crisis hits. And still, healthcare prices are inflated by bureaucracy. The result of all this? According to The New York Times, the number of Americans without health insurance has jumped by a quarter, from 32 million to 40 million since 1990.

How long will it be before health insurance disparities cause the healthy to seek out states with lower insurance costs and the sick to move into states that mandate guaranteed issue and community rating?

—Henry Copeland, Massachusetts, United States

©OECD Observer No 235, December 2002

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